CN overshoots 2013-14 grain handling revenue cap

(Photo courtesy CN)

The Western Grains Research Foundation will get a $4.98 million gift this season from Canadian National Railway, but not out of holiday spirit per se.

The Canadian Transportation Agency on Thursday ruled CN, during the 2013-14 crop year, exceeded its maximum allowable revenue from Prairie grain handling by $4,981,915, above its previously set “entitlement” of $667,128,937.

CN, the CTA said, now has 30 days in which to pay the overage to the WGRF, plus $249,096 as a five per cent penalty.

Montreal-based CN, in a separate statement Thursday, said it’s now “reviewing the agency’s calculations.”

Canadian Pacific Railway (CP), whose annual Prairie grain revenue is also capped under federal regulation, came in at $623,620,236 in 2013-14. That’s $1,653,714 below its “entitlement” of $625,273,950, the agency said.

In 2013-14, the agency said, Canada’s railways moved 38,461,953 tonnes of western grain, a total grain handle 18.8 per cent higher what they moved in the previous crop year.

The average length of haul in 2013-14 was 945 miles — one mile (0.1 per cent) farther than in 2012-13, the CTA said.

Federal transportation law requires the CTA to determine each railway’s maximum revenue entitlement each year and whether it’s exceeded that entitlement has been exceeded.

The caps on CN and CP apply to the movement of grain from Prairie elevators or from U.S. origins to terminals at Vancouver, Prince Rupert, B.C. and Thunder Bay, Ont. They also apply to CN’s and CP’s movements of grain bound for Eastern Canada or for export, up to either Thunder Bay or the CN station about 250 km north of the city at Armstrong, Ont.

Entitlements are calculated by way of a CTA formula taking in elements such as the volume‑related composite price index (VRCPI), which the CTA calculates before April 30 each year based on forecasted price changes for railways’ labour, fuel, material and capital purchases.

The index, along with the tonnage of grain hauled and the average length of haul during the crop year, is used to work out the railways’ yearly entitlements.

Government regulations name the WGRF, a checkoff-financed, farmer-directed Prairie grain research foundation, as the recipient of any overages.

CP was $177,961 over its cap at the end of 2012-13, while CN came in $6.35 million under its entitlement. — Network, with files from Allan Dawson, Manitoba Co-operator

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